Credit Suisse does a monthly Realtor survey. The information is finally turning positive. I wanted to share it with those interested. This survey is of Realtors across the country and NOT Sugar Coated.
Let me know your thoughts! Jeff
5 June 2009
Americas/United States
Equity Research
Homebuilding / MARKET WEIGHT
Monthly Survey of Real Estate
Agents
CHANNEL CHECK
Moderating Traffic Where Buyers See Fewer
“Deals”
■ Tale of two markets – low end remains on fire, little activity at higher price points. Our Monthly Survey of Real Estate Agents pointed to two distinct markets – the frenzied first-time buyer market (mostly foreclosure sales) and the slumbering market at higher price points. Overall, we saw a slight decline in buyer traffic, the first real downtick since the Fall, although the decline was still modest. Continuing the trend from prior months, the markets with the highest levels of traffic were those with plenty of
foreclosures (Ft Myers, Las Vegas, the Inland Empire (inland Southern California), Orlando, Phoenix, and Riverside-San Bernardino [the Inland Empire]). Chicago and Houston were two weak markets in terms of traffic.
■ Agents see foreclosures as being the key traffic generator in most
markets. Agents in the hardest-hit markets such as Ft Myers, Las Vegas, Phoenix, and the Inland Empire described foreclosures and short sales representing 60-75% of sales activity. Agents also noted that investors comprised approximately 40% of buyers in these markets. Texas and East coast markets generally had the lowest level of foreclosures, although we wouldn’t be surprised to see this tick up in the Northeast.
■ Traffic down slightly as buyers see fewer values. Our traffic index fell slightly to 45.4 in May from 48.4 in April, with improving traffic in Las Vegas, Miami, San Diego, and Tampa, whereas we saw declining traffic in Baltimore, Boston, Columbus, Detroit, Los Angeles, Nashville, Pt. St. Lucie, and Portland. In addition to the moderating traffic, agents noted that appraisals have now become far more of an issue.
■ Home prices drifting lower, but likely near a bottom in Foreclosure heavy areas. Our price index increased 2.2 points in May to 27.0, up from 24.8 in April, with any reading below 50 indicating sequentially lower prices. We generally heard of stable prices on foreclosures in many markets and falling prices on non-foreclosure sales. Fort Myers, the Inland Empire, Phoenix, and Washington, D.C., had the highest price indices with trends pointing to near-stable prices. Again, though, the stabilization is occurring on foreclosures, with plenty of pressure on non-foreclosures sales.
HERE IS THE REPORT FOR THE PHOENIX MARKET:
Phoenix, AZ – Buyer Activity Improves; Low End
Homes “Flying Off the Market”
(11,549 single-family permits in 2008, 4th largest market in the country)
Traffic picks up as buyers sense bottom is near. Buyer traffic further improved in May to levels again above agents’ expectations, with our traffic index rising to 73 from 68 in April (readings above 50 indicate traffic above expectations). Multiple agents noted that
“prices are very attractive to investors and first-time home buyers,” especially on foreclosures and short sales (which account for approximately 75% of sales). According to
one agent, “Buyers in the lower price ranges are coming out of the woodwork” to scoop up distressed sales and take advantage of the lower mortgage rates and tax incentives.
There exists a perception that the market is nearing a bottom which has encouraged buyers to return to the market. Well-priced homes are seeing multiple offers as buyers flock to the best values. Tight lending standards remain a main obstacle, and appraisals are coming in lower than sales prices, leading to renegotiations.
Price declines continue as foreclosures dominate sales activity. Home prices fell further in May but were less broad-based than in April, with our price index posting a score of 39 following a reading of 26 in April (readings below 50 indicate lower home prices over the past 30 days). Lower prices helped drive sales and reduce the excess inventory, as our home listings index improved to 83 from 70 in April (readings above 50 suggest decreasing inventory levels). Despite inventory decline this month, absolute levels remain elevated and ongoing foreclosures will likely keep them high for the foreseeable future, which should continue to pressure home prices.
Comments from real estate agents:
■ “Buyers seem to have decided prices are at/near bottom and they’d better get in the market. REO properties are priced well below market value resulting in bidding wars and therefore, higher sales prices.”
■ “The under-$250K market is certainly picking up.”
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